Is AT&T to Blame for Poor iPhone Experience and Is Non-Exclusivity the Answer?

Is AT&T to blame for the poor iPhone experience in cities like San Francisco and New York, where calls drop, data fails, and bars depict signal strength with no real connection behind them? And if so, what can they do about it -- build more network infrastructure, create tiered pricing, or maybe just give up on exclusivity?

And now here we are. Right here in your own backyard, an American company creates a brilliant phone, and that company hands it to you, and gives you an exclusive deal to carry it — and all you guys can do is complain about how much people want to use it. You, Randall Stephenson, and your lazy stupid company — you are the problem. You are what’s wrong with this country.

I stopped, then. There was nothing on the line. Silence. I said, Randall? He goes, Yeah, I’m here. I said, Does any of that make sense? He says, Yeah, but we’re still not going to do it. See, when you run the numbers what you find is that we’re actually better off running a shitty network than making the investment to build a good one. It’s just numbers, Steve. You can’t charge enough to get a return on the investment.

AT&T has made billions in profit off of its user base (and off the iPhone!) and many of those users think it would behoove AT&T to take a large portion of those profits and re-invest them in expanding and improving their network. AT&T claims they're doing just that, especially in high iPhone-density cities like San Francisco (now getting the 850Mhz band) and Dallas (upgrade to 7.2Mb HSPA). And as Fake Steve so deliciously skewered, AT&T Mobile CEO, Ralph de la Vaga has unfathomably discussed stopping users from using their devices under the "unlimited" data plans AT&T markets to them.

But is the problem really AT&T?

The New York Times recently ran an article claiming AT&T had a great network despite consumer dissatisfaction... a great network for every other phone other than the iPhone. Of course, few other data-centric phones are as numerous as the iPhone, and none are as easy to use, or have as many users using as many data-centric features. Not to mention other carriers, such as Rogers in Canada and GSM networks across Europe don't seem to report the sheer number of problems AT&T users do. (We also remember with horror what happened when CrackBerry.com's Kevin took his just-release Rogers BlackBerry Bold to New York.) Perhaps it's the unique combination of AT&T's specific network setup and Apple's iPhone radios.

Either way, the perception problem is entirely AT&Ts at the moment and even with new customer-facing strategies like "Mark the Spot", an app that lets iPhone users report problem areas, it's not likely to change any time soon.

So let's say AT&T does invest billions in infrastructure -- more fast 3G HSPA bars in more places. It's the right and logical things to do, and the thing Fake Steve absolutely nails AT&T for being too greedy to go about doing. But what's the end result? Higher user satisfaction? Where does that lead?

Many suffer poor AT&T service just to own an iPhone. If they didn't have to suffer any more, if AT&T's network was considered as vast and solid as Verizon's, how many more might jump on it? Could even a greatly enhanced and expanded AT&T handle 10 million more people getting iPhones and using even more data, requiring billions more to keep up, and who knows how much to actually get ahead of demand?

AT&T's stick to go along with their network expansion carrot is, of course, capped data and tiered pricing. 3% of users "watching video" (or unofficially tethering, perhaps), using 40% of network resources. (And again, AT&T sold their bill of goods as "unlimited" so it's hard to sympathize). But even capping, throttling, and/or tiering those 3%-ers won't stop the millions of other hitting AT&T's towers over and over again like high volume machine-gun fire. It's not tenable. (Unless they're willing to accept their destiny and become "dumb pipes", then we'll talk).

So that leavoving the iPhone out of AT&T exclusivity and onto other US networks. It's happened in the UK and Canada.

AT&T acknowledges it will happen eventually. The date is unknown to anyone outside the contract-signers, but exclusivity is generally pegged to end in 2010 -- perhaps the end of 2010.

It won't be an easy transition -- T-Mobile uses a different frequency for their 3G bands and Verzion and Sprint use an entirely different radio technology. (Yes, even if Apple sold the iPhone 3GS unlocked, for use on any carrier, the only US carrier that whose 3G network is compatible right now is AT&T). That means, even with Verizon being interested, Apple would have to add T-Mobile's bands, perhaps switch to an entirely new, GSM/CDMA hybrid radio so that it can reach America's three other networks. A non-trivial solution to say the least, but perhaps a necessary one now.

If volumes keeps growing, even Verizon couldn't handle the iPhone by itself either. Just like new highways ease traffic congestion, letting the iPhone speed along several carriers might just make it better for everyone involved -- including AT&T.

Reader comments

Is AT&T to Blame for Poor iPhone Experience and Is Non-Exclusivity the Answer?

Funny how people think it is AT&T's network. I had an iPhone and when I switched from it to a Blackberry the issue was instantly cured. The real truth comes that Apple made a device that has a phone attached, not a phone first that can get some cool apps. Apple is in love with their iPod technology and who can blame them. The iPhone is a fantastic device, but a crappy phone.
For you people that still believe its AT&T let me give you a very simple break down of why its not.
**Lets say you have a Samsung phone. That Samsung A000 phone randomly has a static audio issue. As you get more irritated you take your SIM card and put it into another Samsung A000. Low and behold the same issue occurs! So you put your SIM Card into a Nokia B111, and poof! your problem is no longer! Turns out the Samsung A000 has a known issue that when it switches towers you get a static audio and there is no resolution, its just an issue with the phone. Now put that same scenario in play for the iPhone with dropped calls. Switch phones if your frustrated and you will see your issue with the "poor" network is resolved!

I added some commentary about this on my blog:
"Ries and Trout, authors of The 22 Immutable Laws of Marketing, place AT&T perfectly with their description of Law #4: The Law of Perception. To paraphrase Ries and Trout, a company or product’s perception by the public is more of a reality than the truths behind those assumptions.
Verizon has done a fantastic job over the years convincing the American public that their network is better, even when the data from independent companies shows otherwise. Most cell phone users don’t actively seek out the data behind the commercials; what they do notice are the dropped calls, the bloggers, and the Twitter users who publicly denounce AT&T." Click through http://bit.ly/8QJlXL for more.

also, do people not do any research before buying a phone? if you know at&t has lousy service in your area, why would you use them? did you have to have an iphone (or any other phone) so badly that you didn't care if you could actually use it or not? i actually have great service from at&t here in cincinnati where i primarily use my iphone. no dropped calls, solid 3g data. i did my homework.

the truth of the matter is that if vzw got the sheer number of iphones on their network that at&t has it would likely have the same kind of net work performance problems in some places, and likely the same places at&t does. and t-mobile? forget about it. competition is good, but i see no reason why people think that any other american carrier wouldn't have the same issues as at&t with the iphone.

Yeah I don't use a case on my 3gs either. And my coverage is great also, in Florida.
I use my phone alot wifi and 3g never get on edge/2g it's so slow it's not even worth it.
No problems with iPhone or AT&T here.
Although when I first got my 3g it wasn't as perfect as now.
Plus in the paper AT&T shows maps of Tampa section of Florida a broad range that have no blank spots and then there's no map and it said verizon didn't give us a map so theirs sucks
brought to u by the nations fastest 3g haha

I get the feeling that, when Apple and AT&T struck their deal nearly three years ago, Apple had no idea how popular the iPhone would become (and how big of a deal it would become), so they weren't necessarily put off by signing on with a pretty sub-par network.

@Crunch: Yes, most definitely. I live in Los Angeles and have horrible service from AT&T. I have practically no service in my apartment at all, and I have to leave my phone in one spot and use Bluetooth just to get a signal. Yesterday, I dropped a call while at Santa Monica & La Brea, despite having full bars, then despite having those full bars, 4 more outgoing calls failed before my iPhone 3GS finally registered as "Searching..." I think that makes a full week where I haven't been able to have a complete conversation with someone before my call was dropped. Add in the fact that my data service will inexplicably drop to EDGE all over the place, and that makes me one unhappy customer. (And yes, I've complained about it before -- though like many iPhone owners, I am happy with the iPhone as a device though not as a phone.)
My fiancee commutes on Mulholland and drops calls on that road all the time, as well as driving to and from Mulholland, and I've never able to keep a signal in the Hills either.

I'm not buying that it's AT&T's fault. I live in an area where AT&T has great coverage, unless you own an iPhone. All of my co-workers and friends have AT&T. The Blackberry users, my wife included, have excellent service and NEVER drop calls. The iPhone users can count on at least three to four dropped per day not to mention the calls we simply don't get. I think Apple has a lot more ownership in this problem with the crap radio being put in the phone.

@krooz you said the construction is far superior on the 2g and it is the way to go.
I would never go back to the 2g my 3gs smokes the 2g. Apps launch so much faster, edge was so slow I didn't really surf away from wifi unless it was really important. What's so bad about the construction? I haven't had my 3gs in a case since after the first month it was released, no flaws, no problems.
Don't get me wrong I loved the 2g when I had it but after having the 3gs no chance I would look back.
Not everyone has this AT&T problem that you keep reading about, I can't complain at all. It must suck for some but no complaints here.

I live in Los Angeles, and I must say, in most places, including my house in the Hills, reception has been great for me. I currently have an iPhone 3G "loaner" until I'll get another 3GS with the 7.2Mbps upgrade.
Are there still people in Los Angeles who have crappy service like there used to be (IMHO)?

@Mikeys - I'm on Optus' $59 cap plan with iPhone 3g, which I think offers great value for a frequent user. I wouldn't say my experience has been miserable, I actually get great coverage around my home but I can't compare my iPhone experience on any other carrier as Optus is all I know.
@Frog - the reason Telstra is the least popular is simple, their pricing is a complete joke. Actually Telstra is a joke, I could go on for days explaining why but I'll suppress the rant.
I'm wondering where you got your information on coverage and popularity, if you have any links I'd love to have a look. I assume Optus is most popular followed by Vodafone, then Three (Vodafone and Three could ne around the other way) and I can't imagine Virgin being anywhere but last place. I've found Optus to be reasonable in coverage, better than my old non-3g phone on Vodafone was. I am in suburbs of Melbourne and usually get 3g coverage with some exceptions, when I visit my Dad in a rural town I don't get 3g but I get better reception than his phone on Vodafone.
I'm pretty happy with my Optus experience, although I might look into Three Mobile's iPhone plans when it's time for me to upgrade as my wife has been happy with her 'iPhone wannabe' Samsung F480 on Three. Disregarding carriers, I HAVE been very happy with the iPhone experience. While there is room for improvement, I wouldn't want any other phone.

One thing that boders me is that people don't know how a network works. How complicated it is and how much does it cost.
And another thing. How much money do you thing AT&T pays to apple for the exclusivity?
And how many people are inthe country using the iPhone for sooooo maaaaannny things like streaming video, music, games, etc.
now tell me something do you think that the people that is in verizon, Tmobile and sprint uses their cell phones the way we do? Do they really use the network the way we do?
And the answer is no. So now think what would happne if verizon gets the iPhone ( there is no chance in hell for that).
Most of the people that is in AT&T would go to verizon.
Is that going to be good for verizons network?
You may wanna think about that before you say something bad about a carrier.
The reality about things are that PEOPLE DO NOT UNDERSTAND HOW A NETWORK WORKS AND HOW COMPLICATED IT IS

Lets not forget why us at&t customers have only an unlimited data plan to choose from in the first place. It's for at&t to make up for their subsidized pricing on the iPhone itself. Along with all the other problems you guys have stated, this is also makes it extremely unfair to the consumer not wishing to sign a contract and buy their phone outright. They too will be forced to pay for the "unlimited data."
For me, I have reverted to the 2g phone which in my opinion is the only way to go right now with at@t. My bill is now $15 cheaper for essentially the same features, not to mention the construction of the 2g phone is far superior to any 3g or 3gs (but that is on Apple's end)...

Verizon has good data/smartphones like HTC TP2 and I don't hear their SF and Dallas customers whining. Has anyone looked seriously at whether they really need to push their email, so they can see what's happening on their Facebook page? It would seem that the constant polling and pushing could represent a bit of the problem. Therefore, if you need push/poll PAY a higher price for your data. Most of us who travel outside the USA turn those features off just so we don't get a $1,000 phone bill.

Yes. The same reason the smartphone market keeps improving as the iPhone came out and the other smartphones become better, which forces Apple to improve the iPhone which forces the other smartphones to become better, which forces Apple...You get the point. AT&T being the only carrier does not give them incentive to improve their service greatly. They do just enough to improve certain things to keep people on their hook, but for the most part, they have done nothing. Although AT&T 3G can talk and surf at the same time, if you try it, the speed is not as fast as they claim. TMobile would have forced AT&T to seriously improve their coverage and service, since they are cheaper.

@Davie199: Thanks for the correction. I don't know where I read that apparently false information about tethering with Droid.
Also, have I missed some announcement that the 3% of iPhone owners using 40% of the data are actually using more than 5GB per month? I think it's a leap to call them "data hogs" using up your precious network resources without that definite knowledge. If they're using the bandwidth they paid for, who cares? Is AT&T just avoiding making it known that they have users who are flagrantly abusing their data caps without any regulation?

@Dennis Tethering is not an option on the Droid via Verizon. There are 3rd party apps like PDANet avail, but not supplied or supported by Verizon. Also, if you have a PDA or smartphone on Verizon the going price for the data package with tethering is $59.99/month, the same as a data card that is capped at 5gb/month.
@Lolipopjones I would say the percentage of smartphone users that tether is greater than 10%. I support them all day long and it seems that the number is growing.

"The unique combination of AT&T's network and the iPhone's radio"...
In Australia, our second major carrier (Optus) has a similar issue - the network is borked, overloaded, and downright miserable to use with an iPhone... At least here we have 4 other networks we can choose from...
End exclusivity, and provide alternative radio's for your fellow American's Apple.

Tethering isn't pushing anything when it comes to the Droid... Its funny how some people that do not work in the Cell industry think Tethering is a huge selling point.
Of VzW's smartphone users 10% tether.

Just as an aside, I think it's pretty obvious that AT&T simply hasn't been able to supply the network resources necessary for notebook tethering. In that regard, AT&T hasn't done well by the iPhone and its capabilities. Verizon's $30/month tethering plan with a separate data cap for Droid is pretty reasonable, and I suspect that the tethering plan is pushing Droid sales for pre-existing Verizon customers who are used to paying $70 per month for a separate cellular data plan. That's a huge chunk of change for a small business or self-employed person. If AT&T can't afford to offer network support for all the iPhone's functions (as determined by those functions that are promoted by Apple and that exist in other areas of the world market), then Apple needs to shop the iPhone around.

I've been pretty down on AT&T because they as well as Apple mismanaged the iPhone 3G pretty badly, resulting in finger pointing and blame shifting. They rolled out their network so fast that they didn't have the capacity to monitor its usage. That resulted in a lot of bad PR moves by AT&T. There were at least two arts festivals that attracted iPhone users and had their own iPhone apps for festival-goers, but because of their location, the number of iPhone users basically rendered the AT&T data network unusable and the festival-specific apps useless. By the time AT&T was aware of the problems, it was too late to respond. And news stories that were supposed to be about how cool the iPhone experience was at a cool arts festival turned out to be about how AT&T's network was completely crushed. Those stories ran on Wired magazine, which then got it in their heads to run a national speed test survey specifically for AT&T; that survey turned out badly for AT&T as well. AT&T had several opportunities where it could have benefited from having the iPhone 3G, and it pretty much messed up every single one of them.
That's all in the past now. From this point on, AT&T would be better off losing some heavy data users, which would improve their network and maybe help them lose their image as an unreliable carrier. If they can lose that image, they can take some notebook data plan customers from Verizon, and notebooks are apparently easier on a network than smartphones because of the reduced tower swapping or whatever.
I continue to have no sympathy for AT&T. They sold people on unlimited data and took a risk with the iPhone in order to build out their 3G network. And they did get a pretty massive 3G network out of the deal, which they simply now have to make more profitable, even at the expense of customers for a period of time. Only time will tell if they can keep up their network speeds and their reliability at the same time, with their competitors pumping up their own network speeds in the near future, without being hobbled by millions of data hogging iPhones.
As far as Apple goes, at this point Apple would be better off getting the iPhone on multiple carriers. The main limiting factor for further iPhone sales at this point surely has to be carrier exclusivity more than any other factor. Not just every person, small business, or corporation can go with one carrier. And now the iPhone is seeing increasingly stiff competition from Android, which is or will be on every carrier. AT&T and Apple are both at a point where they have benefited from their partnership but would be better off parting ways.

Nope not at all. In Australia we have the option of 5 carriers for the iPhone. The one with the worst speeds and most drop-outs is the most popular. The one with the least 3G coverage (1/100th of the coverage of the number largest 3G network), is the second most popular.
Telstra, which run the worlds largest and faster 3G network ; it is absolutely flawless. 4mbps speeds minimum, 99% population coverage, full bars pretty much everywhere - rural or city and, about 100 times more 3G coverage than the others = least popular network for iPhone.
Non-exclusivity certainly caused a price war, but actually made the networks worse.

When iphone becomes available to other carriers, I doubt they will be able to handle this data-guzzling device as people start to clog their network with overwhelming data from browser and apps. They will suffer the same fate as AT&T. They're networks are not even fast enough at the moment, I can't imagine how worse that be could be.

Wow, the iPhone situation in the US is more complicated than I realised.
Down in Australia we have iPhone available on at least five of our major carriers, all have their own pros and cons ie. cost vs coverage, services vs quality etc.
I do feel that in the US, the iPhone consumer suffers a lot due to AT&T exclusivity because you might not be offered competitive pricing and/or AT&T doesn't cover your area.
Down here we aren't offered as many smart phones eg. DROID, and those we are offered are usually priced quite highly and seem to be targeted at business rather than personal use. The iPhone is actually priced quite well for the frequent to heavy user. I do like to follow the competition in the US, not because I want to jump ship, but because hopefully it will force Apple to improve the iPhone's functionality.
Hopefully iPhone becomes available on more carriers in the US so the competition gets mote intense.

Yes AT&T is to blame. In fact they're also responsible for cancer. If Verizon had the iPhone they could cure it though...
All sarcasm aside, there's a lot of hatred toward one company because they played the best game and got the most popular smart phone of all time.
That said, you don't have to use either the device or the network. You can port your number to the carrier that works best where you live and travel. Instead of finding new ways to gripe about what you don't like, make a more lasting statement and take your business elsewhere. AT&T is more likely to resolve customer complaints if they start losing them, than reading about them online.
Just my opinion.

New highways don't ease congestion - they encourage more driving and create more traffic. The only sensible solution, economically speaking, is tiered pricing. The people on the network crowding out the rest of us should pay more. We accept it for airline tickets, there's no reason to believe iPhone data plans should be any different.

The addition of another 3G radio is not that hard.
I'm ready for Motorola to come on out with this radio that will operate it on all US 3G bands. That will make every GSM subscriber a happy camper, I tell ya what.